Chapter 8: Global pension systems
The outlook on global pension systems and their reforms since the early 1990s has changed markedly; the most recent reassessment is triggered by the ongoing global financial crisis and its implications for funded and unfunded pensions. After the fall of the Iron Curtain and the move in Central and Eastern Europe from central planning to market economies, the future for pension systems for some experts and policy-makers appeared bright and fairly certain once the initial crisis was overcome: transferring main parts of retirement income provisions from the public sector to the private sector, first, to address fiscal unsustainability and projected further population ageing and, second, to accelerate financial market development, was expected to trigger higher economic growth to co-finance some of the transition costs. This policy vision emerged from various sources: the successful Chilean pension reform and similar reform attempts in Latin America; the seminal 1994 World Bank publication that proposed a multi-pillar pension scheme with a significant shift from publicly managed, unfunded defined-benefit (DB) schemes to privately managed, fully funded defined-contribution (DC) schemes (World Bank, 1994); and general enthusiasm and optimism for more market and financial intermediation instead of public intervention. This policy vision caught on in many countries: between 1988 and 2008, 29 countries introduced systemic reforms involving the establishment of a main funded pension pillar but with variations in design, implementation, and outcome (Figure 8.1).
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